Inherited IRA Calculator
Calculate required distributions for an inherited IRA.
What this calculator does
This inherited IRA calculator projects how a retirement account you have inherited will be drawn down and what it will cost you in tax. Enter the account balance, your expected withdrawal pattern, an assumed rate of return, and your marginal tax rate, and it shows the balance over time, the distributions required, and the tax due along the way.
Inherited IRAs are governed by rules that are unusually easy to get wrong, because they changed substantially for deaths after 2019 and again when the final regulations landed. The value of modelling this is less about growth projections and more about seeing where the tax falls.
When to use it
Use it as soon as you know you are a beneficiary, before taking any distribution. The first decision — whether you are subject to the 10-year rule or qualify as an eligible designated beneficiary, and whether annual distributions are required within those ten years — determines everything that follows, and an early withdrawal made in error cannot be undone.
It is also the tool for the timing question that decides your total tax bill. Ten years of discretion over when to realise income is genuinely valuable, and the difference between a considered schedule and an unplanned one is often tens of thousands of dollars. Model a few patterns against the income you expect in each of those years.
Understanding the inputs
Account balance is the value at the date of death, adjusted for any market movement since. Your marginal tax rate is the input that matters most: inherited traditional IRA distributions stack on top of your other income, so a large withdrawal can push you into a higher bracket and the effective rate on that money may exceed the bracket you started in.
The rate of return applies to whatever stays invested inside the account. The withdrawal schedule is where the real decision lives — try an even split across ten years, a single lump in year ten, and a front-loaded pattern, and compare the total tax rather than the final balance.
How is this calculated?
Based on SECURE Act rules, most non-spouse beneficiaries must empty an inherited IRA within 10 years.
A worked example
Suppose you inherit a $400,000 traditional IRA at age 45, subject to the 10-year rule, with the account growing at 6 percent and your marginal rate at 24 percent. Withdrawing an even tenth of the growing balance each year yields roughly $53,000 a year and total tax of about $127,000 across the decade.
Leaving it untouched instead lets the balance grow to roughly $716,000 by year ten — but taking that in a single year pushes a large slice into the 32 and 35 percent brackets, costing well over $200,000. The lump sum grows more and keeps less. Front-loading into two low-income years, by contrast, can land under the even-split figure.
Limitations and assumptions
This calculator models growth, distributions, and tax at a flat marginal rate. It does not apply the bracket structure to large withdrawals, so a single-year lump sum will understate the tax due. It does not determine which distribution regime applies to you, calculate life-expectancy factors for eligible designated beneficiaries, or account for state income tax.
The rules here depend on the date of death, your relationship to the deceased, and whether they had reached their required beginning date, and they have been revised more than once since 2019. Confirm your category and your deadline with the IRS guidance or a tax professional before acting — the cost of getting the classification wrong is far larger than the cost of advice.
Common Questions
- What is the 10-year rule?
- For most beneficiaries of an account owner who died after 2019, the entire inherited IRA must be emptied by December 31 of the tenth year following the year of death. It replaced the old stretch IRA, which allowed distributions across a beneficiary's own life expectancy and often ran for decades.
- Do I have to take withdrawals every year, or just empty it by year ten?
- It depends on whether the original owner had already begun required minimum distributions. If they had, you must take annual RMDs during years one through nine and clear the balance in year ten. If they died before their required beginning date, you can take nothing until year ten, then withdraw everything.
- Who is exempt from the 10-year rule?
- Five categories of eligible designated beneficiary: a surviving spouse, a minor child of the original owner, someone disabled, someone chronically ill, and any beneficiary not more than ten years younger than the deceased. These can still stretch distributions over their own life expectancy.
- What are my options as a surviving spouse?
- You have the most flexibility. You can treat the IRA as your own, rolling it into your existing account and delaying distributions until your own required beginning age. Or you can keep it as an inherited IRA, which preserves penalty-free access before 59½ — usually the better choice if you are younger than that and need the money.
- Will I pay a 10 percent early withdrawal penalty?
- No. Distributions from an inherited IRA are exempt from the 10 percent additional tax regardless of your age, which is one of the few advantages of inheriting rather than owning. Income tax still applies in full on distributions from a traditional inherited IRA.
- How is an inherited Roth IRA treated?
- The same 10-year emptying deadline usually applies, but distributions are generally tax-free provided the account satisfied the five-year holding rule. Because there is no tax cost to waiting, the common strategy is to leave an inherited Roth untouched for the full ten years and let it grow, then withdraw in year ten.
- What happens if I miss a required distribution?
- The penalty is 25 percent of the amount you should have taken, reduced to 10 percent if you correct it promptly and file the right form. It is a substantial charge for an administrative slip, and the deadline is easy to overlook in years when no distribution feels due.
- Can I roll an inherited IRA into my own account?
- Only a surviving spouse can. Every other beneficiary must keep the assets in a properly titled inherited IRA and cannot contribute to it or roll it into a personal retirement account. Moving it must be done as a direct trustee-to-trustee transfer — taking possession of the funds triggers immediate taxation of the whole balance.
- Should I spread withdrawals evenly across the ten years?
- Even withdrawals are a reasonable default because they avoid stacking the whole balance into one year's income, but they are rarely optimal. The better approach is to take more in low-income years and less in high-income ones — for example, drawing heavily in a year between jobs or after retiring but before Social Security begins.